How CRE Stands To Benefit From The New Federal Tax Rules

The tax landscape for commercial real estate changed dramatically when President Donald Trump signed the One Big Beautiful Bill Act  into law in 2025. 

Among its several CRE-friendly provisions, the law lowered the corporate tax rate from 35% to a flat 21%.  

Warren Dazzio, executive vice president of sales for CSSI Services, a tax consulting firm whose expertise includes performing cost segregation studies for CRE clients, said those with an LLC, S Corp or C Corp did not see their tax rates rise as a result of the bill. This is significant, he said, because most real estate owners have their properties in one of those entities.

“The Big Beautiful Bill made the landscape for a real estate professional very favorable, particularly people who are buying real estate,” Dazzio said. 

Bisnow spoke with Dazzio to learn how else the tax bill’s sweeping changes impact CRE, particularly its reinstatement of 100% bonus depreciation and elimination of the 179D energy-efficiency deductions for energy upgrades.

Bisnow: After all is said and done, what impact did the OBBBA have on CRE?

Dazzio: If you've owned real estate for a period of time, the bill didn't change it drastically. But the whole idea was to create an incentive to make the tax landscape more favorable and stimulate people to buy property, and that should stimulate the economy. This benefits everybody, including title companies, real estate professionals and bankers, because lots of property is changing hands.

Bisnow: Any property that is built or bought after Jan. 19, 2025, now qualifies for 100% bonus depreciation. What does that mean in practical terms?

Dazzio: If I buy a million-dollar building, I could get anywhere from 20% to 30% of that as a deduction right now. So if I take 30%, that's a $300K deduction, and multiply that times the higher tax bracket, it ends up being about $110K in tax savings. 

If I don't have to pay the IRS $110K in taxes, I now have cash flow to make improvements on my property and increase rent, or maybe put a down payment on another property. The whole idea is that it stimulates growth.

Bisnow: What is the biggest question your clients have about the new law?

Dazzio: Lots of prior clients are calling and asking if this bill changed anything for them. If they bought the building in 2023, then no, it doesn't change anything. But if they are buying a new building, then this certainly applies to them.

Bisnow: But people who purchased prior to 2025 aren’t without options, right?

Dazzio: Bonus depreciation has been available at different times and through different administrations. It follows the year that you acquire a building. 

So, if you bought a building from 2018 to 2022, when 100% bonus was last available before it began to sunset, but you never did a cost segregation study, then you never tapped into that bonus depreciation. 

However, you can do a look-back study and capture that bonus depreciation on your current tax return. 

Let’s say you owned a building that you bought in 2019 for a million dollars and it has depreciated over the past six years. If you wanted the deductions today, you could go back without amending the tax return and capture it on the current tax return today using a simple form called the IRS 3115.

I think the biggest thing your readers should know is that you can apply bonus depreciation in many different instances. It's not just for a new property that you bought today. You could have bought it 10 or 20 years ago and still benefit. 

Bisnow: Is depreciation an option for improvements made to a building?

Dazzio: I worked with a client on their 1920s bank building in Louisiana. It was fully depreciated, but the owners did a $3M improvement in 2022, and we were able to do a bonus depreciation on that improvement. 

While the OBBB applies only to new buildings, it makes sense to look back to see if you can still benefit on older properties because you can apply bonus depreciation in many different instances.

Bisnow: What impact does the elimination of 179D Energy Efficiency Studies have on your clients? What can they use in its place to offset the cost of energy upgrades?

Dazzio: Any new construction that starts before June 30 of 2026 still qualifies for 179D. If you start construction after June 30, then 179D doesn't apply to you anymore. 

We're telling people that there is a sense of urgency to look at it or to start construction now, because if your construction gets delayed till after that June 30 date, you can't benefit from 179D. 

But clients can still benefit from performing 179D on new construction of up to $1.80 per square foot for a deduction. And there's a sweet spot: The law was changed under the prior administration, and if you started construction in 2022 and finished it afterwards, you could get up to $5 per square foot as a deduction because your building is more efficient than the code requires. That’s a benefit that people can tap into to help reduce their tax burden even with the sunsetting of 179D.

Bisnow: Where can Bisnow readers turn for more information about these changes in federal tax law?

Dazzio: The American Institute of Certified Public Accountants is a great resource for information. In addition, we at CSSI Services are experts in all things building- and tax-related, and it's not unusual for people to read something related to OBBB and then call us and say, “Explain this to me.” One way we grow our business is by acting as consultants on these matters.

This article was produced in collaboration between CSSI Services and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.